Lifting of Iran’s sanctions to impact fuel price

Fuel prices are likely to decrease further with major oil producing country; Iran entering the global market after sanctions on the country’s oil exports was lifted Saturday.

Global oil market is looking increasingly favourable for most countries that are net importers of fossil fuel including Bhutan and India.

Last year, international oil prices slumped to its lowest when it decreased from US$ 140 a barrel to US$ 45 a barrel. The decrease was a result of increase in global oil supply after developed countries like the United States started producing Shale Oil, an expensive method of extracting fossil fuel.

In the last two months, fuel prices decreased four times. Petrol price decreased by Nu 1.7 a litre while diesel decreased by Nu 2.4 a litre.

Today, the market is speculating further reduction in price with Iran entering the global oil market. Just as the lifting of sanctions against Iran was announced last Saturday, price of petrol and diesel saw marginal decrease in the country today.

Petrol price decreased by 0.28 Chetrum a liter and diesel decreased by almost a Ngultrum.

According to international media, Iran will add over a million barrel per day to the global supply of fossil fuel.

A decrease in fuel price is particularly good for import driven countries like Bhutan as it helps in maintaining price stability. In Bhutan, prices of all goods and services including food and non-food are expected to decrease or remain stable with global fuel prices decreasing.

This is because with decrease in fuel prices transportation of goods and services to different places also becomes cheaper. Therefore, Bhutan’s consumer inflation is likely to drop further very soon.